Banking Guide: FSCS Deposit Protection UK — How Your Bank Savings Are Protected Up to £120,000

The Financial Services Compensation Scheme (FSCS) is the UK's statutory lifeboat fund for customers of failed financial services firms. It was established under the Financial Services and Markets Act 2000 and is funded by levies on FCA-authorised and PRA-regulated firms — not by the government or taxpayers directly.

When a bank, building society, or credit union is declared in default — meaning it cannot repay depositors — the FSCS steps in automatically. You do not need to file a complex claim or hire a solicitor. In most cases, the FSCS contacts you directly and transfers protected funds to a new account within seven calendar days. For the majority of savers, this process is entirely invisible: your money appears in a new account before you have had time to worry.

The scheme covers customers of firms authorised by the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). Any bank displaying the FSCS logo or listed on the FCA Register is covered. You can verify a firm's status at any time using the FCA Financial Services Register.

Key legal basis and governance:

• Authorising body: PRA / FCA dual-regulated
• Payment timeline: 7 calendar days for deposits (20 days for some complex cases)
• Funding: Industry levy — not a government fund
• Eligibility: Individuals, small businesses, charities, and certain other entities

Sources: FSCS — How We Work, FCA — FSCS

The standard FSCS deposit protection limit increased from £85,000 to £120,000 per eligible person per authorised firm on 1 December 2025. This change followed a review by the PRA and FCA, which found that the original £85,000 limit — set in 2010 — had been eroded by inflation and no longer covered as large a proportion of UK savers as intended.

The increase applies to:

• Deposits in banks, building societies, and credit unions authorised by the PRA
• Per eligible person per firm — so a couple each have £120,000 of separate cover at the same bank
• All eligible account types: current accounts, easy access savings, fixed-rate bonds, cash ISAs, notice accounts

The £85,000 limit for investment protection (stocks and shares ISAs, investment portfolios held with FCA-authorised investment firms) has not changed — it remains at £85,000 per person per firm. See our guide FSCS Protection: What UK Investors Need to Know for the full detail on investment cover.

For context, with the Bank of England base rate at 3.75%, a saver with £120,000 in an easy access account earning close to the base rate would earn around £4,500 per year in interest — and all of that balance is now protected under the new limit.

Source: FSCS — Deposit Limit Increase December 2025

The FSCS covers a wide range of financial products, but the protection varies significantly by product type. Understanding what is and is not covered helps you structure your finances for maximum safety.

What is covered:

What is NOT covered:

• Foreign currency deposits held with UK banks are generally not protected
• Cryptocurrency — not covered at all; crypto firms are not FSCS-authorised for deposit protection
• Deposits with non-authorised firms — if the firm is not on the FCA Register, there is no FSCS cover
• Business deposits — only small businesses (fewer than 10 employees and annual turnover below €2 million) are eligible; large corporates are not
• Government bonds (gilts) — you own them outright; they are not deposits
• Premium Bonds — held by National Savings & Investments (NS&I), which is backed 100% by the Treasury, so FSCS cover is not needed. See our Premium Bonds vs Savings Accounts guide for a comparison
• Losses from bad investment decisions — FSCS covers firm failure, not poor returns

Cash ISAs are a common source of confusion. They are deposits, so they receive £120,000 deposit protection — not the £85,000 investment protection limit. For more on ISA strategy, visit our ISA hub.

Source: FSCS — What We Cover

Not every institution that calls itself a bank is FSCS-protected. Before depositing money, take two minutes to verify coverage.

Step 1: Check the FCA Register Go to register.fca.org.uk and search for your bank's legal name (not its trading name). Look for PRA-authorised status under the 'Permissions' tab. The entry should list deposit-taking as a regulated activity.

Step 2: Look for the FSCS logo FSCS-authorised firms are required to display the FSCS logo in their branches and on their websites. If you cannot find it, that is a warning sign.

Step 3: Check the FSCS website directly The FSCS publishes a searchable list of covered firms at fscs.org.uk/check-your-money-is-protected.

Important: Banking licence sharing Some banks share a single banking licence, which means they share a single £120,000 FSCS limit. For example, Halifax and Bank of Scotland are both part of Lloyds Banking Group and share one PRA authorisation. If you have £80,000 with Halifax and £60,000 with Bank of Scotland, only £120,000 in total is protected — not £140,000.

Always check the legal entity behind a brand. The FSCS website lists which brands share a licence. This is particularly relevant when spreading savings across multiple institutions for protection purposes — see the section below.

Source: FSCS — Check Your Money Is Protected

With a £120,000 limit per person per authorised firm, it is straightforward to protect large sums by spreading deposits. A couple with £480,000 in savings can protect every penny by splitting it across just two banks — £120,000 each per bank, four pots in total.

Practical spreading strategies:

For individuals:

• Keep up to £120,000 per bank, building society, or credit union
• Use separate licences — not just separate brands within the same group
• A mix of easy access accounts and fixed-rate bonds at different banks works well

For couples:

• Each partner has their own £120,000 limit at each bank
• A joint account provides £120,000 per eligible person — so £240,000 per bank for two people
• Combining joint and individual accounts, a couple can protect £360,000 at a single bank: £120,000 in a sole account each (£240,000 total) plus £120,000 each in a joint account (another £240,000) — though the joint account element counts against each person's £120,000 limit at that firm

Personal Savings Allowance interaction: With the Bank of England base rate at 3.75%, spreading savings can mean earning interest at multiple banks. Basic rate taxpayers have a £1,000 Personal Savings Allowance (PSA); higher rate taxpayers have £500. Interest earned within the PSA is tax-free. Spreading across banks does not change the PSA — it remains a single annual allowance across all savings interest.

For a full guide to savings accounts and structuring your cash, see our Savings hub and the NS&I products guide.

Source: FSCS — Your Protection Explained

Most people encounter the FSCS limit as a background fact — reassuring but rarely tested. However, there are life events that can leave you temporarily holding far more than £120,000 in a single account: selling a house, receiving an inheritance, a redundancy settlement, or a pension lump sum.

The FSCS provides extended protection for these situations through the Temporary High Balance (THB) scheme:

• Coverage: Up to £1,000,000 per person (and an additional £400,000 in specific circumstances — e.g. proceeds from a property sale, making the practical maximum £1.4 million in some cases)
• Duration: Six months from when the funds are deposited
• Qualifying circumstances include:
  • Sale of a residential property
  • Inheritance or probate
  • Divorce or civil dissolution settlement
  • Personal injury compensation
  • Redundancy payment
  • Marriage or civil partnership
  • Death benefit from an insurance policy

If your bank fails while you hold a qualifying temporary high balance, you must notify the FSCS that your balance qualifies and provide supporting documentation (e.g. a solicitor's completion statement, a grant of probate). The FSCS will then pay out the protected amount, which includes both your standard £120,000 and the temporary top-up.

After six months, only the standard £120,000 limit applies. If you receive a large lump sum, note the date and make a plan to redistribute funds across multiple FSCS-covered banks before the six-month window closes.

Source: FSCS — Temporary High Balances

The FSCS is designed to be as automatic as possible. In most cases you will not need to do anything — the FSCS contacts you and transfers your protected funds within seven days. However, knowing the process helps if you need to act.

Automatic payouts (most cases):

1. A bank is declared in default by the PRA
2. The FSCS uses the bank's own records to identify eligible depositors
3. Protected funds are transferred to a new account (often at a designated partner bank) within 7 days
4. You receive a letter or email confirming the transfer

When you may need to file a claim:

• Your balance exceeded £120,000 and you want to claim the protected portion
• You qualify for Temporary High Balance top-up protection
• There is a dispute about the amount owed
• You are claiming for an investment, insurance, or mortgage product

How to file:

• Online at fscs.org.uk
• By phone: 0800 678 1100 (free from UK landlines and mobiles)
• There is no fee — the FSCS service is entirely free to consumers
• The claim deadline is typically several years from the firm's default date, but do not delay unnecessarily

What you will need:

• Proof of identity (passport or driving licence)
• Evidence of your balance (statements)
• For THB claims: documentary evidence of the qualifying event

For investment claims, the process is broadly similar but may take longer — up to 6 months for complex cases. For more on investment firm protection, see our Investing hub.

Sources: FSCS — Make a Claim, Bank of England — Depositor Protection

This article is for informational purposes only and does not constitute financial advice. You should consult a qualified financial adviser before making any financial decisions.